Surgery suspension and your PAYG tax instalments
The latest iteration of covid related disruptions results in the postponement of all non-urgent elective surgeries until March 1. This decision assumes that QLD's public health system has sufficient capacity to deal with the expected peak of Omicron cases in the upcoming weeks.
In early 2020, the suspension of surgery was for only several weeks and ended up having minimal disruption to medical specialists income streams. Whilst doctors were out of the theatre, their administration staff took the opportunity to catch up on the backlog of unprocessed medical billings. Combined with JobKeeper and Cashflow boost tax incentives, there was a temporary and minor dip in revenue and cash flow until surgery lists resumed.
However, the current landscape relating to the omicron surge may have a significant impact on your revenue and cash flow. When writing this article, there are no upcoming grants or tax incentives by the state or federal government to cushion the impact of Omicron on the healthcare industry, particularly medical specialists impacted by non-urgent elective surgeries.
As a medical specialist who relies on procedural work, your revenue will drop between 10% to 20% for the current financial year. Moreover, if you run your own business, your running costs still need to be paid, and for most medical specialist practices, these are relatively fixed, regardless of your earnings. So aside from the stress of watching your bank balance diminish, you also need to consider if you are paying more in quarterly PAYG Instalment (PAYGI) tax. As a high-income earner on quarterly tax instalments, your accountant should manage your estimated tax for the full financial year rather than from quarter to quarter in isolation. The more you can evenly spread your quarterly tax payments, the less of a shock you will get when the lump sum is due.
For this financial year, any year-end tax shortfall will not be payable until sometime between April and June 2023. Consider the following variables when calculating to vary your PAYG tax instalments for the December 2021, March 2022 and June 2022 quarters.
the expected time surgeries are suspended
fixed operating costs (if you operate your business)
how busy you expect to be once you return, given the ongoing availability of theatre space and staff
Our team can create an estimate of future tax payments and review your current and future tax instalments to assist you. A small investment of your time to understand the impact of any changes to your tax payments and cash flow will help take the stress out of the situation. Click the button below to email our team requesting our assistance